This research combines insights from resource dependence and institutional theories to examine the growth of Chinese nonprofit revenues. The authors propose the concept of embedded government control ( EGC ) to capture the complexity of the government-nonprofit relationship along two dimensions: government regulation of nonprofits' public fund-raising qualifications and the political embeddedness of nonprofits with the government. Using a data set of 2,159 Chinese philanthropic foundations for the period 2005-12, the authors test hypotheses about the implications of EGC for nonprofit revenues in China following two major external shocks: the Wenchuan earthquake in 2008 and the Guo Meimei scandal in 2011. The empirical analysis shows that EGC can help philanthropic foundations obtain more government subsidies, donations, and market revenues. However, external shocks may either strengthen or weaken the enabling role of EGC in helping foundations acquire relatively more donations.
Practitioner Points• The concept of embedded government control captures the complexity of the government-nonprofit relationship along two dimensions: government regulation of nonprofits' public fund-raising qualifications and the political embeddedness of nonprofits with the government. • Embedded government control can be witnessed in both Western and non-Western nations, but its political and regulatory implications may vary across nations. • Embedded government control may help nonprofits maintain a relatively good position in generating revenues. • External shocks, such as the occurrence of a natural disaster or nonprofit scandal, may strengthen or weaken the enabling role of embedded government control in helping nonprofits acquire relatively more donations. • Public policy makers and nonprofit leaders need to enhance nonprofit governance quality and transparency so that the nonprofit sector can gain public trust and drive sustainable growth.